Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Why Galena Biopharma, Inc. Shares Tumbled

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Galena Biopharma (NASDAQ: GALE  ) , a biopharmaceutical company focused on developing immunotherapeutic options to treat cancer, fell as much as 21% after reporting its quarterly results after the closing bell last night and disclosing an investigation by the Securities and Exchange Commission.

So what: For the quarter, Galena reported net revenue of $1.3 million, driven by sales of newly acquired FDA-approved drug Abstral for breakthrough cancer pain, and an operating loss of $12.4 million due to higher costs from ongoing clinical studies. In the year-ago quarter, Galena produced no revenue and delivered a smaller operating loss of just $5.6 million. Net loss, however, swelled due to $38.9 million in non-cash charges to $48.5 million, causing Galena to widely miss Wall Street's EPS estimates. On the positive side, though, Galena boosted its 2014 forecast for Abstral sales to a new range of $11 million-$15 million from its previous projections of $8 million-$12 million.

What really has investors up in arms is an admission on page 37 of its annual 10-K filing that "[i]n February 2014we learned that the SEC is investigating certain matters relating to our company and an outside investor-relations firm that we retained in 2013. We have been in contact with the SEC staff through our counsel and are cooperating with the investigation." Concerns have been raised in recent weeks that Galena may have hired a stock promoter to boost the value of its shares (see here and here, for example). Apparently, this has created enough real buzz that the SEC is looking more closely into whether that was the case.

Now what: There are few biotech companies that are as polarizing as Galena Biopharma -- you generally either love it or hate it. This SEC investigation is clearly a blow to a company whose earnings report otherwise signaled -- with the exception of one-time non-cash charges -- that it may be headed in the right direction. Keep in mind, of course, that SEC investigations sometimes turn up nothing or can lead to nothing more than a slap on the wrist. On other occasions, they may lead to hefty fines, which Galena may have difficulty absorbing. There are a lot of possible outcomes here, and given that uncertainty surrounding this investigation, you're probably best off sticking to the sidelines until we have better clarity.

Galena Biopharma may offer investors a ton of potential, but even it could struggle to keep up with this top stock in 2014
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Read/Post Comments (1) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2880198, ~/Articles/ArticleHandler.aspx, 9/4/2015 8:52:34 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Sean Williams

A Fool since 2010, and a graduate from UC San Diego with a B.A. in Economics, Sean specializes in the healthcare sector and in investment planning topics. You'll usually find him writing about Obamacare, marijuana, developing drugs, diagnostics, and medical devices, Social Security, taxes, or any number of other macroeconomic issues.

Today's Market

updated 11 hours ago Sponsored by:
DOW 16,374.76 23.38 0.00%
S&P 500 1,951.13 2.27 0.00%
NASD 4,733.50 0.00 0.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/3/2015 3:59 PM
GALE $1.62 Down +0.00 +0.00%
Galena Biopharma,… CAPS Rating: *